Private sector defends that Brazil supports the regulation of the global carbon market at COP 26

A definitive understanding on the subject could generate revenues of up to US$ 72 billion for the country; This position was presented by CEBDS this Wednesday to the Minister of Foreign Affairs

 

October 8, 2021 – The business sector calls on the Brazilian government to review its position and support the immediate regulation of the global carbon market, with the creation of market instruments for the trade of greenhouse gas (GHG) emission reductions ). An evolution of Brazil's position is essential to overcome barriers and resolve one of the main issues and challenges of the next United Nations Climate Conference, COP 26, to be held next month in Glasgow.

 

The regulation of these instruments, provided for in Article 6 of the Paris Agreement, has been discussed since 2015 and could generate trade of US$ 167 billion a year in 2030 and US$ 347 billion a year in 2050, as estimated by the International Emissions Trading Association. Brazil is one of the countries with the greatest potential for selling credits and could generate net revenues of up to US$ 72 billion by 2030, according to estimates by the Environmental Defense Fund.

 

“Reaching a definitive understanding of the rules is fundamental for Brazil's green economic recovery,” said Marina Grossi, president of the Brazilian Business Council for Sustainable Development (CEBDS), which leads this private sector initiative. “These instruments will bring financial resources that will generate jobs and expand technology in Brazil towards a low-carbon economy.”

 

The position was presented this Wednesday, October 13, in a meeting with the Minister of Foreign Affairs, Carlos França. A technical note that the CEBDS will release this Friday (15), with recommendations to the Federal Government, points out that “Article 6 is a window of opportunity for Brazil, which will not only be able to dispose of its [credits] forest and agricultural offsets, thus valuing great natural assets that the country has, but also to engage our private sector in a global emissions trading on its path of neutralization”. CEBDS brings together 77 business groups operating in Brazil, responsible for 47% of the national GDP and 1.1 million jobs.

 

The regulation requires, among other things, the creation of adjustments in countries' emission reduction commitments to avoid double counting. That is, when a country buys carbon credits to meet its commitments, the country that sells it cannot use the same credits to meet its targets. On the other hand, the country that sells the credits receives external resources that will finance investments to reduce emissions.

 

Carbon credits traded under these adjustment rules will be worth more in the market than those at risk of double counting because there will be more clarity about their impact on global emissions reductions. In view of this, most European Union nations (with a buyer profile to offset their emissions) and many developing countries with large forest areas (and greater potential for selling credits) are among the 32 signatories of the San José Principles, which include commitment to adjustments to avoid double counting. Brazil, however, is not part of this group.

 

The global quest to neutralize greenhouse gas emissions will lead companies to seek carbon credits in the international market. This is another great opportunity for Brazil, as by 2030 the country could be responsible for up to 50% of carbon credits generated in the voluntary market from nature-based solutions. These are initiatives such as reducing deforestation and forest degradation, sustainable management of green areas and reforestation. The private sector considers that the risk for Brazil of maintaining a position contrary to the full application of the adjustment mechanism is delaying its entry into a market in which the country has an enormous competitive advantage.

 

“Brazil needs to discuss how to prepare to participate in the trade opportunities offered by our competitive advantages. The concession of corresponding adjustments for trade, with the market instruments of Article 6, needs to be managed in favor of our competitive advantages, and not as barriers to them”, states the document prepared by CEBDS. “With Article 6, the country will finally be able to value its efforts to reduce and remove GHGs and thus finance our neutralization trajectory, expanding our competitiveness and international insertion in the new low-carbon, circular and inclusive green economy.”

 

Share:

Sign up for our newsletter

Enter your email and receive our content. We respect the privacy of your information by not sharing it with anyone.

Latest publications

Latest news